Booming sales for formula makers Bubs Australia and AuMake are yet to translate to break-even

Dairy formula makers Bubs Australia (ASX:BUB) and AuMake International (ASX:AU8) have both reported bumper revenues for the 2019 half-year, though they are still operating at a loss.

Bubs, which started speaking about its half-year revenue when it reported quarterly results back in January, yesterday announced that it was making goat infant formula through a partnership with Bega Cheese.

AuMake is focused entirely on the China tourist market — the retailer sells Australian brands to locally-based Chinese consumers, or ‘daigou’ through product showrooms.

Bubs posted an incredible 508 per cent increase in revenue for the half-year, selling $19.5 million worth of its products, compared with just $3.2 million in the previous half-year.

AuMake also had a triple figure increase in revenue, banking $21.9 million, a 142 per cent increase on the year prior.

Both companies’ shares were up this morning, Bubs by 5 per cent to 62c and AuMake by 20 per cent to 24c, but they’ve lost value over the past year.

Both companies are also operating at a loss. Bubs’ half-year loss blew out by 127 per cent to $8.8 million thanks to increased distribution, employee, marketing and administrative costs, while AuMake was able to narrow its loss by 48 per cent, reducing it to just under $3 million.

Each spoke to the impact of sales in China to boost revenue.

“We have had noticeable success with our focus on China’s Cross-border eCommerce channel, and in Mother and Baby stores, to the extent sales into China grew ten-fold over the same period last year,” said Kristy Carr, Bubs CEO. 

“These revenue increases validate our focus on investing in our China route-to-market strategy and associated channel capacity.”

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